Denmark’s pensions and insurance lobby group has published a new report which it hopes crushes misconceptions that there is only limited competition in the pensions sector, and railed against new regulation it says could hit the industry hard.
Kent Damsgaard, chief executive officer of Insurance & Pension Denmark (IPD), said: “I really hope that the report here can stop politicians and authorities taking a booming pension industry for granted.”
IPD said the report took five parameters into account in measuring competition – company dynamics, the business of equity, wage premiums, decreasing administrative expenses and efficiency in investing pension assets.
“On all five indicators, the report documents fierce competition. For example, the number of companies has almost halved in 15 years,” the industry association said.
Competition in Denmark’s pensions industry was not only fierce, but increasingly fierce, Damsgaard said, and added that the recently-introduced special tax in the financial sector had had a negative impact on the pensions and insurance industry.
Damsgaard, who came to IPD in September 2020, said he had come across the misconception that there was only limited competition in the pension industry several times since he joined.
“But it’s a picture that is very far from the reality of the companies,” he said.
More regulation was underway in several other areas, he added, which he said could have a big negative impact on the industry and its customers’ savings.
Highlighting new rules on management responsibility in financial companies as an example, he said they would make it harder to attract the best people to firms’ top management and supervisory boards, as well as adding an extra layer of compliance.
“We understand and share the desire to be able to take a hard line in the face of serious management failures. But the proposal here is simply wrong,” Damsgaard said.
IPD said it was also working to mitigate potential negative effects of new Solvency II regulations currently being discussed by the European Commission.
“Every time you introduce new demands, it is the basis of customers’ support in old age that bears the burden, because there is no extra protective layer that can be eroded,” Damsgaard said.
Back in December, Denmark’s Consumer and Competition Authority criticised the fee model used by the country’s commercial pension providers back, which it said was preventing new players from asserting themselves in the market.